The investors have said there is no official mechanism so far to monitor gold sales on the Internet and the consumers therefore should be skeptical about making gold purchases from online stores.

Saudi Gazette report

DAMMAM — A number of investors have warned consumers against the possibility of fake or low-quality gold being sold to them through unaccredited online stores, which have increased their presence lately creating a dent in the Saudi gold market, Al-Eqtisadiah business daily reported.

The investors have said there is no official mechanism so far to monitor gold sales on the Internet and the consumers therefore should be skeptical about making gold purchases from online stores.

Abdul Ghani Al-Saiegh, deputy chief of the goldsmiths in Makkah, has said since e-commerce has become an important tool in world trade, including gold and jewels, the Kingdom needs to have a broader approach to transfer this global experiment to the local market with strict controls and tight supervision to protect the consumers.

Saiegh, who is a member of the committee on precious metals and stones at the Council of Saudi Chambers, said there are people who trade in gold on social media without any official permits from the Ministry of Commerce and Investment.

"There is no supervision on the measurement of carats and no control on the money transfer, which is against the instructions of the Interior Ministry," he said.

Saiegh said the sale of gold on social media sites is done on per piece basis while internationally gold is sold by its weight and number of carats.

"These people who sell gold on the Internet have no experience in the business but they lure interested customers to make quick profits," he said.

He called on the ministry to intervene and regulate the sale of gold on the Internet.

"These rules are important not only for controlling the market but also for protecting both the investors and the consumers," he added.

Saiegh said the trading of gold on the Internet is not only harmful to the investors but is hazardous to the national economy as well.

"Gold could be used in money laundering operations and for making illegal profits, which may be harmful to the Kingdom's economy and security," he warned.

"A number of well-known global brands are now selling gold on the Internet and we too need to have this in the Kingdom but under strict controls," he said.

"The ministry had assured us that it was working on the rules and regulations on gold trade on the Internet but so far nothing has happened," he said.

Saiegh said due to the lack of a proper licensing process, gold traders in the Kingdom cannot open online stores to sell gold and jewelry via social media.

Mohammed Jameel Azouz, another member of the committee, said a number of local traders sell gold to their customers on the Internet but without official license from the ministry.

He said the problem facing gold sellers and the customers is the delivery of gold as transport companies refuse to deliver gold because it is highly expensive to ensure security.

"The transport of gold is done by the traders on their own using private cars or with the help of ordinary drivers, which is extremely risky," he said.

Abdul Ghani Al-Mahana, chairman of the committee for gold and jewels of the Eastern Province Chamber of Commerce and Industry, noted that online gold trade is on the rise despite the lack of a licensing process.

"A large amount of the gold traded on the Internet might be fake or not according to the standards and specifications," he warned.

He asked the concerned authorities to intervene to put an immediate end to this kind of fraudulent activity.